Exporters bear bigger costs after Hanjin’s fallKorean exporters are feeling the crunch of rising shipping costs after the collapse of the nation’s largest container line, a new survey of local small and midsize companies shows.
More than 65 percent of local exporters with over $1 million in exports last year said they were facing bigger shipping costs after Hanjin Shipping went bankrupt, according to a survey of 332 exporters conducted by the Korea International Trade Association between Feb. 9 and Feb. 16 The results of the survey were released Thursday.
Hanjin Shipping officially liquidated on Feb. 17, but it was essentially out of business since last September after the company filed for court receivership at the end of August. The void has ended a protracted price war between the world’s largest shipping companies and led to shipping prices gradually going up again this year.
Local exporters, though, are not readily responding to the changes.
More than 57 percent of those surveyed said they were adjusting by looking to other alternative shipping companies, while 12 percent said they were raising the price of their goods and 23 percent said they were simply bearing the increased cost burden themselves.
“Many small and midsize exporters are either reflecting the increased shipping costs in their product prices or letting it eat into the company’s profit,” said Kim Byung-hoon, general director at the Korea International Trade Association’s logistics department. “In the process of looking for solutions to such a situation, exporters may face additional business damage such as delivery delays or losing overseas customers due to undermined prices and service quality competitiveness.”
Korean exporters are counting on homegrown shipping companies to secure more vessel space for delivery because of the inconvenience of using foreign shipping lines.
“There are still many difficulties in inking contracts with foreign players as they prioritize cargo from China and other countries over Korea,” the Korea International Trade Association’s report said, “and they frequently change shipping schedules even after loading cargo.”
For their part, Korean container lines are gearing up to meet exporters’ needs.
Hyundai Merchant Marine signed a strategic partnership with two smaller Korean shipping companies to strengthen business in the intra-Asian routes. Under the partnership, which took effect starting this month, the companies will be able to use each other’s idle vessel slots in intra-Asian routes to save on costs and establish new service networks.
SM Line, a new Korean container line set to enter the Pacific trade with assets bought from Hanjin, said it secured 12 container vessels on Monday and will begin operations on March 8 on a route connecting Korea, Thailand and Vietnam. Service to the American West Coast will begin in April.
BY KIM JEE-HEE [email@example.com]